In the Asia-Pacific, China Plays Nice Because It Can

The contested waters of the South China Sea are a geopolitical flashpoint, but for now they exist in a period of comparative calm. Following a July ruling by the Permanent Court of Arbitration, countries with territorial claims in the waters struck a conciliatory tone, most prominently over the Scarborough Shoal — a barely submerged coral atoll that has become a touchstone for affairs between China and the Philippines, traditional adversaries in the South China Sea. A normally recalcitrant Beijing, forced to accept a more delicate and complex maritime arrangement in the region, is making placating gestures at last.

The shoal is emblematic of deeper issues at stake, namely the nature of maritime boundaries and bilateral concerns over fishing rights and exploitation of strategic territory. Philippine President Rodrigo Duterte made a high-profile visit to China in October and, following a strategic recalibration on both sides, Beijing and Manila appeared to be moving toward a joint mechanism of control over the shoal. The aspiration is that the countries will eventually be able to achieve some form of coexistence. That said, such a delicate arrangement is susceptible to domestic pressure, especially from nationalist movements, and to additional sovereignty disputes that may develop.

Since early November, China has quietly eased its naval blockade around Scarborough Shoal, which it seized in 2012 after a hostile standoff. As part of the ongoing appeasement process, Beijing not only allowed access to Filipino fishermen and vessels but also offered fishing assistance. Although Philippine coast guard vessels have also been permitted to return to the locale, many points of contention are unresolved. Beijing still exercises some degree of control over the shoal, including conducting routine patrols, and Manila will not ease its attempts to push maritime boundaries. China has blocked access to the shoal's central lagoon. In return, Duterte has called for a fishing ban in the lagoon itself. And there is the matter of the underlying claim of sovereignty, which remains unresolved. Even with this diplomatic chafing, however, Beijing and Manila appear to have enough strategic reasons to sustain the current arrangement, at least for now.

An Evolving Strategy

[sidebar title=EEZ imgurl="https://www.stratfor.com/sites/default/files/styles/stratfor_large__s_/public/main/images/eez-image.jpg?itok=uICGBb7q"] The 1994 U.N. Convention on the Law of the Sea grants nations an exclusive economic zone of up to 200 nautical miles from the coast and around some islands, carrying rights to marine resources. This makes the official status of tiny rocks, reefs and islands essential. [/sidebar]Located 120 nautical miles from the Philippine mainland — well within Manila's internationally recognized exclusive economic zone — Scarborough Shoal also rests within the eastern edge of China's maritime claim, known as the nine-dash line. The shoal is crucial to Manila's territorial integrity and is a buttress when it comes to external security. Yet, it is also key terrain in Beijing's plan to become a maritime power. The net result of these incompatible positions is that neither side will back off its claim. For Manila, Beijing's seizure of the shoal — and subsequent expansionism — not only dealt a serious blow to Philippine maritime defense but also represents a diminishing opportunity to counter Beijing's broader maritime aggressiveness in a practical manner.

In achieving international legal intervention, Manila won a diplomatic upper hand, but despite the July arbitration ruling, effectively resisting Beijing physically proved impossible. Furthermore, the Philippines' vocal opposition to China and its orientation toward Washington (and, to a lesser extent, Tokyo) put Manila at risk of Chinese maritime aggression as well as economic and diplomatic alienation. In context, Duterte's diplomatic reorientation allows Manila to amend its volatile relationship with Beijing while attaining desirable economic concessions. At the same time, Duterte hopes to restore a Philippine presence along the maritime boundary. This, in turn, could help alleviate domestic resistance toward the regional rebalancing act.

Similarly, Beijing perceives eased relations with Manila over the South China Sea as an opportunity to expand its own strategic space. China's immediate concessions are a luxury afforded by its significant tactical advantage in the shoal: Its strong military presence and its naval and maritime enforcement advantage over the Philippines would allow Beijing to achieve full control if it so desires. Indeed, the chances of China reasserting itself there are high, despite Washington's warnings against such an action.

By offering some concessions on Scarborough Shoal, however, Beijing shows its far-reaching aspirations. An effective arrangement to manage the dispute demonstrates Beijing's willingness to negotiate, encouraging other South China Sea claimants to rethink their approach. Beijing hopes the diplomatic track will help reduce external involvement, leading to international acknowledgement of its maritime interests. Shortly after the Permanent Court of Arbitration ruling, Beijing refashioned its joint energy exploration proposals — which had been stalled for years — and reached out to a number of claimant countries through significant economic concessions. Meanwhile, China also enticed Malaysia and Vietnam back toward bilateral negotiations, but with mixed results.

Beijing Tries Diplomacy

China's charm offensive is in part driven by an evolving strategic recalibration at home. Despite its ambition for maritime domination, Beijing's policy of expansionism over the past six years led to contradictory outcomes for its foreign policy agenda. South China Sea claimant states — most notably the Philippines and Vietnam, and to a lesser extent Indonesia and Malaysia — have responded to Beijing's activities by expanding their military capabilities while seeking cooperation from external powers, such as the United States, Japan and India. The result has been increasingly internationalized waters that, from China's perspective, equate to hostile competitors stalking its periphery. At the same time, Beijing understands that the strategic ambiguity over its maritime claims — its ungrounded nine-dash line, lack of clearly defined sovereignty and defiance of international law — has reached a limit.

It is unlikely that Beijing will ever ease its assertive behavior in the South China Sea. Rather, the new maritime status quo, aided by the court ruling, could lead China to reconsider which strategies best suit the country's immediate interests. New courses of action might take years to develop, but for now, Beijing's current imperatives — to avoid outright military confrontations, circumvent further interference from the international community and not provoke all of its Association of Southeast Asian Nations neighbors at once — make further antagonistic behavior counterproductive.

A High-Stakes Game

The fate of Scarborough Shoal speaks to the new maritime reality for most South China Sea claimants: China's dominant military and technological advantages. Lacking options to effectively counter Beijing's practical control, either by force or international intervention, claimant countries are rendered powerless. This also feeds the prevailing regional perception of Washington's reduced sway in the Asia-Pacific and explains the generally conciliatory gestures made by Malaysia, Vietnam and the Philippines. Beneath the status quo, however, one thing is assured: Every stakeholder in the South China Sea is working behind the scenes to strengthen its footing. Claimant countries continue to search for external supporters to bolster their defense and negotiation positions; China plots to take control of what it considers to be its rightful territory; and the United States, working within its regional alliance, must somehow continue to assert itself, even though the future presidential administration's intentions remain unknown for now.

Whether Beijing's conciliatory stance over Scarborough Shoal marks a genuine strategy shift or is simply a facade, the underlying fervor surrounding territorial rights will not dim anytime soon. China is a past master at manipulating sovereignty for its own ends and is more than content to provoke through words, if not actions. Beijing's talk of "allowing access" to the shoal rather than conceding a claim fuels nationalist sentiments in Manila. In many respects, Scarborough Shoal is a testing ground for China, and any future territorial challenges will depend on the political climate in claimant countries as well as abroad. There is also the question of Beijing's maritime ambitions, which might render the need for diplomacy obsolete.

As peaceful as things may appear on the surface, when it comes to Scarborough Shoal, the stakes are as high as they ever were. And when China no longer feels inhibited by the desire to play nice, there will be no dispute as to who physically owns the shoal. The question then switches to what, if anything, the region or the international community is prepared to do about it.